Kellogg Company manufactures cereal and other convenience food under its many well-known brands such as Kellogg’s®, Keebler®, and Cheez-It®. The company, with over $13.5 billion in annual sales worldwide, partially finances its operation through the issuance of debt. At the beginning of its 2015 fiscal year, it had $6.2 billion in total debt. At the end of fiscal year 2015, its total debt had increased to $6.3 billion. Its fiscal 2015 interest expense was $266 million, and its assumed statutory tax rate was 37%.
Compute the company’s average pretax borrowing cost?